In addition to its effect on surfactant lipids, surfactant protein (SP)-A promotes host defense. To define further the role of SP-A in regulating immune cell function, we evaluated the effect of SP-A on lipopolysaccharide (LPS)-activated alveolar macrophages in two settings. First, cocultured LPS-activated macrophages significantly inhibited lung fibroblast growth, but SP-A (added daily) attenuated this effect. Both LPS and SP-A acted via macrophages rather than directly on the fibroblasts, at least partially by affecting tumor necrosis factor (TNF)-alpha activity. TNF-alpha reproduced the growth suppression, anti-TNF-alpha antibodies attenuated the effect LPS-activated macrophages, and SP-A reduced TNF-alpha activity in conditioned medium. Second, SP-A reduced TNF-alpha activity in medium from isolated LPS-stimulated macrophages. The effects of SP-A were noted with or without serum, were dose-dependent and reversible, and were seen with two different serotypes of smooth LPS. Equimolar concentrations of immunoglobulin G and C1q had no effect. Thus SP-A both enhances host defense and modulates immune functions of alveolar macrophages.